Friday Five: Obama Plan to Help Housing Market Would Bypass Congress

White House makes another push for home owners, sales of second homes increase, and the principal reduction controversy grows.

President Barack Obama introduced two more housing initiatives Tuesday that would reduce refinancing fees for FHA-backed mortgages and help military families stay in their homes if they’ve been foreclosed on. With a gridlocked Congress, Obama appears to be exhausting his options to help the housing market. That story and more in this week’s top housing headline round up.

This week, Obama announced a new plan to cut refinancing fees for any loan insured by the Federal Housing Administration (FHA). The president also outlined a new agreement with banks to review foreclosures for members of the military that have taken place since 2006 and provide compensation to anyone who wrongfully lost a home. Neither plan requires Congress’s approval.

Second homes aren’t just for the extremely affluent and tropically inclined, as the latest numbers show. Nineteen percent of recent home buyers own more than one home, up 5% from the previous year, according to a NATIONAL ASSOCIATION OF REALTORS® survey. Further, vacation properties made up 27% of all home sales last year. And the destinations aren’t just south-of-the-border getaways. Some of the biggest second-home markets fall in lesser-known cities in the U.S., such as Silverdale, Wash., Whitefish, Mo., and Flagstaff, Ariz.

Facing heightened pressure from the White House and Congressional Democrats, Federal Housing Finance Agency Acting Director Edward DeMarco doubled down last week on his opposition to allow Fannie Mae and Freddie Mac, the agencies he regulates, to reduce the principal on underwater mortgages. Is DeMarco bypassing an effective tool that would not only help home owners get out from under crushing debt but also fuel the embryonic housing recovery?

Since home owners insurance is something many people buy but few are forced to actually use, the average consumer is far from being an expert in comparing policies in advance or navigating the claims process when the unexpected does happen. A new report from the Consumer Federation of America says consumers are often on the hook for more costs than they realized, including deductibles and coverage gaps for certain events, such as flooding, that private insurance rarely covers.